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Panama Papers to lead to increased enforcement of financial crime regulations globally

NEW YORK, Aug. 24, 2016—As Panama Papers disclosures continue, more than half of respondents (51.3 percent) to a recent Deloitte Advisory poll expect global enforcement of anti-corruption, anti-fraud, anti-money laundering, and sanctions regulations to increase in the next 12 months.

“While we don’t recommend organizations limit their risk assessments of financial crime exposures to only Panama Papers data, the leaks certainly offer a new ‘wake-up call’ on the importance of stemming beneficial ownership and third-party risks,” said Michael Shepard, Deloitte Global AML, economic sanctions and financial crimes leader. “Failure to mitigate financial crime risk can result in legal and regulatory violations, civil and criminal penalties, inability to grow through acquisition, reputational damage, and court appointment of an outside risk monitor.”

While most respondents expressed some level of confidence in their organizations’ abilities to identify and mitigate financial crime, 8.9 percent said they had no such confidence.

“Leaks of the Panama Papers affect more than just financial institutions. All multinational organizations should understand what potential exposures third parties and customers pose to them,” said Chris Georgiou, Deloitte Advisory partner in the forensic and investigations practice of Deloitte Financial Advisory Services LLP. “Now is not the time to place your company or yourself in a position to claim ignorance with government authorities and regulators.”

Some of the challenges respondents said hinder their organizations’ efforts to identify and mitigate financial crimes include: lack of visibility into the ultimate beneficial ownership structure of organizations (20.8 percent); inadequate third-party or customer due diligence policies and procedures (15.8 percent); and limited use of advanced analytics to monitor payments to holding companies in certain riskier foreign locations (12.5 percent).

Signs of an inadequate financial crime risk management program include:

  • Poor relationship due diligence practices—While some organizations may conduct sufficient third-party and customer diligence related to new relationships, they may not review due diligence performed—sometimes many years earlier and far less detailed than today’s efforts—on existing third parties and clients.
  • Lack of visibility into ultimate beneficial ownership structures—Potentially restricted entities and thinly capitalized foreign companies may conceal the identities of the individuals behind them for nefarious reasons. Business rationales for maintaining relationships with those resisting transparency may be outdated.
  • Limited use of advanced analytics to monitor payments—Whether payments are made to thinly capitalized holding companies in riskier jurisdictions or paid by potentially restricted entities and their third parties, robust use of payments analytics can help. However, the quality of analytics outcomes is only as high as the quality of data analyzed.

About the online poll
More than 2,050 professionals participated in a Deloitte Advisory Dbriefs webcast, “In the wake of the Panama Papers: Proactively assessing your risks,” on July 22, 2016. Poll respondents work in industries including financial services (36.9 percent); consumer and industrial products (22.6 percent); and technology, media and telecommunications (10.8 percent).

About Deloitte Advisory
Deloitte Advisory helps organizations turn critical and complex business issues into opportunities for growth, resilience, and long-term advantage. Our market-leading teams help our clients manage strategic, financial, operational, technological, and regulatory risk to enhance enterprise value, while our experience in mergers and acquisitions, fraud, litigation, and reorganizations helps clients emerge stronger and more resilient.

As used in this document, “Deloitte Global” refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL does not provide services to clients. As used in this document, “Deloitte Advisory” means Deloitte & Touche LLP, which provides audit and enterprise risk services; Deloitte Financial Advisory Services LLP, which provides forensic, dispute, and other consulting services; and its affiliate, Deloitte Transactions and Business Analytics LLP, which provides a wide range of advisory and analytics services. Deloitte Transactions and Business Analytics LLP is not a certified public accounting firm. These entities are separate subsidiaries of Deloitte LLP. Please see for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

Media contact:

Shelley Pfaendler
Public Relations
Deloitte Services LP
+1 212 492 4484

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